What is PRAN in Atal pension?
If you’re an Indian citizen and working in the unorganized sector, saving for your retirement might not be the foremost thought on your mind. To take the guesswork out of ensuring your financial future, the government has a policy in place to lighten the load.
Securing a Pension on a National Scale
In January 2004, the National Pension System or NPS was introduced by the government. What this now meant was that every worker in India, regardless of their level of income, had the opportunity to save adequately for their future and ensure a sustainable income well into their old age.
PRAN – the Key to Saving
Under this pension scheme, every employee is given a PRAN or rather a Permanent Retirement Account Number. This unique number is a code that allows employees to control two types of personalized accounts in their name. The first account, Tier I, is purely for saving purposes and does not allow for the withdrawing of funds. Tier II, on the other hand, is under the complete control of the employee. Serving as a transactional facility, this account allows the employee to save at their leisure, as much or as little as they desire.
PRAN for Atal pension Yojana
Initially it was thought that a person can have a single PRAN number but it was soon realized that each APY subscriber have been getting a separate PRAN for this particular scheme.
A New Scheme in Name and Benefits
Previously, employees in the unorganized sector belonged to the social security scheme called Swavalamban Yojana NPS Lite. Proving to be largely unpopular however, an adjustment was made to this scheme earlier in 2015 by the new government. Known as the Atal Pension Yojana or APY, this new scheme caters specifically to the needs of workers in the unorganized sector. Unlike the former scheme, this updated retirement plan sees the Indian government offering attractive benefits to every member – the most impressive being a contribution of 50% to every member’s yearly savings (that’s the equivalent of Rs. 1000 each year over the span of five years). This benefit is exclusive to new members joining before 31 December 2015 who also do not fall in an income tax bracket.
What’s in It for You?
So just how much would the average employee get out of this updated pension scheme? Well, new members are accepted between the ages of 18 and 40 years. As a joining member under 40 years, you would be in line to receive Rs. 5,000 each month should you retire at the age of 60 years. To receive your guaranteed pension payout, a subscriber must contribute monthly to the pension scheme for at least 20 years.